Equinix’s proposed purchase of Switch and Data seems to be facing some hurdles at the anti-trust division of the Department of Justice. In filings today, the two companies pushed back the expected closing of the deal into the second quarter. After resetting the waiting period once already in December, Equinix has now received a second request to which it needs to respond and which adds yet another 30 days to the process. Is there a chance the government will nix the deal entirely? I doubt it.
Equinix is certainly becoming quite large, but there remains a healthy competitive environment – new facilities are being built by many parties all over the country. If there is harm to competition from the deal, it will be on a market by market basis and in the worst case all Equinix probably would have to do is to divest some of the extra assets. That’s something they are likely to do anyway, not every piece of Switch and Data is a perfect fit with their strategy.
It’s quite a change from the previous administration though, which shrugged off the reassembly of much of the old Ma Bell while AT&T and Verizon promised to be good while crossing their fingers behind their backs. Equinix is improperly flexing its muscle, it is that they increasingly realize that the data center business is now an integral part of the national infrastructure. They don’t really understand the sector very well yet, and they don’t want to wake up one day and have a problem. Therefore, as good hard-working bureaucrats, they are going to take their time on this one and make them jump through a few extra hoops.
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